The Credit Expected field located on the AP Invoice form is designed to allow the user to document and request a credit upon entry of the invoice.
The amount entered in the credit expected field cannot be negative.
Before utilizing this function, identify short pay vendors.
When short pay is enabled on the vendor record, only the Net amount of the AP Invoice will be paid to the Vendor and the Credit Expected amount will not be accounted for as an expense, instead it will be recorded to the account listed in the Accounts tab of System Preferences as the ‘Credit Expected’ account.
It is likely that none, or very few, of your Vendors are Short Pay Vendors.
Short Pay Vendors
To set a vendor as a short pay vendor, open the Vendor record. Then:
Navigate to the Procurement section.
Expand Advanced Settings.
Toggle on Short Pay.
Save the record.
The main distinction between a Short Pay Vendor and a regular Vendor is how the Credit Expected will be recorded on your General Ledger.
Short Pay Vendors
For a Short Pay vendor, when a Credit Expected is entered on an AP invoice, the value entered in the field is ignored on the Distribution tab of the AP Invoice, and the credit against the Accounts Payable account would be set to the amount that was short paid.
Non Short Pay Vendors (regular Vendors)
For non short pay vendors, when a Credit Expected value is entered on an AP Invoice, the value entered in the field will be recorded against the Vendor Credit Expected account that was set as a default account in System Preferences.
Requesting a Credit Using the Credit Expected Field
When the Credit Expected field is used properly, it can be a valuable tool in identifying the credits that are due from vendors and a method to immediately request the credits from a vendor during invoice entry and review.
Prerequisites
To begin, ensure that personal email settings have been correctly setup in R365. This is required for your R365 user to be able to send credit request emails from within the AP Invoice screen.
Request a Credit
To request a credit, follow these steps:
1) During an AP Invoice entry, if there is a credit that is due, enter the value in the Credit Expected field.
When a value is entered, the Credit Comment field will also appear. Enter a comment to further explain the expected credit.
2) Click the menu button and select Email Credit Request.
If the invoice has been saved or approved, Email Credit Request may be further down the dropdown list.
3) The Email Credit Request prompt will appear. Enter the To email address and click Send.
The following information will already be populated:
Subject line with the invoice number, total, and date
Email body with the request, credit expected, and reason (credit comment entered)
The recipient address must be entered.
4) If the vendor is not a short pay vendor, the Credit Expected value will reside on the Vendor Credit Expected account displayed on the Distribution tab. Wait for the Vendor to issue you a Credit Memo.
5) Once the credit memo has been issued, record it in R365 by clicking Create and from the Vendor list, selecting Credit Memo. The Credit Memo form will open in a new tab.
6) Complete the credit memo.
Instead of recording the credit against an expense account, it must be recorded against the same Vendor Credit Expected account that it was previous recorded against. This will then remove the expected credit from the credit holding account.
If the Vendor issuing the Credit Memo is invoiced by Item, use any of the following options when recording the credit memo:
Select the purchased / vendor Item that the credit is for, then manually update the GL account value on the item row to be set to the vendor credit expected account.
Create a new purchased item named Vendor Credit and set the default Cost Account on the item to the same vendor credit expected account.
Do not select an item. Click Add line. Then, enter a quantity of 1, set the Each amount to the full amount of the credit memo. Then, select the vendor credit expected account. The line item will be added to the credit memo.
The final step is to apply the credit memo to an AP invoice from the same vendor. Follow the instructions on the AP Credit Memo article or the Check Run: Apply Credits article.